Why did the Industrial Revolution Start in England?

By the end of the 19th century, the island of Great Britain, which is about the size of the state of Louisiana, controlled the largest empire in the history of the world—an empire that covered one quarter of the world’s land mass. You will learn more about this empire in the next chapter. But how did this little island come to rule an empire? How did Great Britain acquire so much military and economic power in the world? The answer, of course, is that it had an enormous commercial and technological head start over the rest of the world because the Industrial Revolution started in England. But why did the Industrial Revolution occur first in England and not somewhere else in the world? Historians describe a confluence—a coming together—of many factors and they do not agree on which are most important. Some of these factors we discussed earlier because they had their seeds in pre-industrial society. All of these factors came together in the late 18th century to create the unique conditions in England that culminated in the first-ever Industrial Revolution:

The Agricultural Revolution discussed earlier resulted in increased food production and increased population in England first.

Population Growth, also discussed earlier, resulted in more people from the countryside being freed up to work for wages in the new cities,— and eventually increased demand for products such as clothing.

Financial Innovations—such as central banks, stock markets, and joint stock companies—encouraged people, especially in Northern Europe, to take risks with investments, trade, and new technologies.

The Enlightenmentand the Scientific Revolution encouraged scholars and craftspeople to apply new scientific thinking to mechanical and technological challenges. In the centuries before the Industrial Revolution, Europeans gradually incorporated science and reason into their worldview. Some historians argue that these intellectual shifts made English culture, in particular, highly receptive to new mechanical and financial ideas.

Navigable Rivers and Canals in Great Britain quickened the pace and cheapened the cost of transportation of raw materials and finished products. Adam Smith, the first modern economist, believed this was a key reason for England’s early success. In 1776, in his famous book An Inquiry into the Nature and Causes of the Wealth of Nations, he wrote that “Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon a level with those in the neighbourhood of the town. They are upon that account the greatest of all improvements” (Weightman 43).

Coal and Iron deposits were plentiful in Great Britain and proved essential to the development of all new machines made of iron or steel and powered by coal—such as the steam-powered machinery in textile factories, and the locomotive.

Government Policies in England toward property and commerce encouraged innovation and the spread of global trade. The government created patent laws that allowed inventors to benefit financially from the “intellectual property” of their inventions. The British government also encouraged global trade by expanding the Navy to protect trade and granting monopolies or other financial incentives to companies so they would explore the world to find resources.

World Trade gradually increased in the centuries before the Industrial Revolution and provided European countries access to raw materials and a market for goods. It also increased wealth that could then be loaned by banks to finance more industrial expansion in an upward spiral of economic growth. By 1500, Europe had a technological supremacy over the rest of the world in shipbuilding, navigation, and metallurgy (metal working). In successive years, European countries would use these advantages to dominate world trade with Asia, Africa, and the Americas.

The Cottage Industry, discussed earlier, served as a transition from a rural to an industrial economy. Like the later industrial factories, the cottage industry relied on wage labor, cloth production, tools and rudimentary machines, and a market to buy and sell raw materials (cotton) and finished products (clothes).

The Large and Lucky Continent of Eurasia. Evolutionary Biologist Jared Diamond takes the long view to explain why the entire continent of Eurasia evolved to be so technologically advanced. In his book Guns, Germs, and Steel: The Fate of Human Societies, Diamond argues that the good fortune of the entire continent of Eurasia was evident for thousands of years. Eurasia invented agriculture 12,000 years ago because large grains of rice and wheat just happened to originate and grow there. The efficiency of agriculture allowed various civilizations to grow population, free up labor for tasks besides food production, urbanize, invent writing, and create advanced technology. Diamond argues that the largest of continents was also blessed with the largest domesticated animals in the world—such as horses, donkeys, pigs, and cows. These animals served as beasts of burden in agriculture and also as a much-needed food source. And so the health of Eurasian populations improved. These animals also brought epidemic diseases that killed millions of Eurasians over thousands of years. But, after the plague ran its course through the population, surviving Eurasians then had antibodies to these illnesses, which made them and their ancestors resistant to them. So these plagues became a horrifying stroke of good luck for invading Eurasians later on. People from the Americas had no medium to large domesticated animals (with the exception of the Alpaca which didn’t leave the Andes mountain area). As a result, they did not experience devastating animal-based plagues and diseases. That’s a good thing, right? Except that, unlike Europeans, the Americans did not then have the anti-bodies to resist the European illnesses. So, when Europeans invaded the Americas after 1492, people from the Americas were highly susceptible to Eurasian deadly viruses and diseases. But no plagues went the other direction from the Americas to Europe. The depopulation of the Americas made it easy for Europeans to conquer. In short, Diamond, contrary to many historians, sees the Industrial Revolution as an inevitable result of geography and evolutionary biology that played out not only in a burst of activity, but over many thousands of years.

The Big Industrial Innovations: How the Industrial Revolution Began in Great Britain

We have learned many reasons why industrialization started in Europe and England. But which industry triggered the Industrial Revolution in England? Well, it all started with the textile (cloth) industry. Making cloth, by hand, for pants, shirts, socks, bedspreads and other domestic items had always required lots of skill and time. As population grew in England, more people needed and were willing to buy textile goods. The cottage industry showed how much people could produce in their homes through spinning and weaving cloth by hand. But this domestic production system could not keep up with the growing demands of England’s growing population. Instead, starting in the late 18th century, a series of innovations shifted textile production to a new factory system. And cotton led the way. As a result of the Industrial Revolution, cotton became the world’s most important non-food agricultural product-- and it remains so to this day.

In the 1700s, cotton textiles had many production advantages over other types of cloth. The first textile factory in Great Britain was actually for making silk. But, since only wealthy people could afford the product, production remained very low. Cotton, on the other hand, was far less expensive. It was also stronger and more easily colored and washed than wool or linen.

One challenge of using cotton, however, was that the British did not grow any cotton plants because of their cold climate. So, they revved up trade with cotton producers far across the world, such as India and the Southern United States. Look at the table below of American cotton production during the first stage of the Industrial Revolution. Almost all of this raw cotton, processed by slave labor, was sold to England. This cotton production soared as new inventions made textile production increasingly inexpensive and efficient.

American Production of Raw Cotton, 1790-1860 (in bales)

Year

Production

1790

3, 135

1795

16,719

1800

73,145

1805

146,290

1810

177,638

1815

208,986

1820

334,378

1825

532, 915

1830

731,452

1835

1,060,711

1840

1,346,232

1845

1,804,223

1850

2,133,851

1855

3,217,417

1860

3,837,402

(Gray)

Textile Inventions

In 1733, James Kay, a clockmaker, invented a simple weaving machine called the flying shuttle. He built it, supposedly, with nothing more than a pocketknife as his tool. The flying shuttle improved on the old hand loom. A worker pulled a cord of rope back and forth to send a small piece of canoe-shaped wood, or shuttle, “flying” across a wood frame through threads to weave cloth. The machine only came into general use in the 1760s—after decades of trial-and-error improvements—but once adopted, this first big invention in the textile industry doubled worker productivity: one adult weaver could accomplish the work of two. The invention was a small improvement and was still powered by people rather than coal, wind, or water. Nonetheless it began the crucial process by which unskilled workers could produce more cloth with machines than skilled workers could produce by hand (Weightman 55).

Now watch a few moments of this video to see somebody working a flying shuttle. With a flick of the wrist, they can make the shuttle "fly" back and forth through the weaving frames. Much quicker than hand weaving, eh?

In the 1760s, spinning innovations finally caught up with the weaving capacity of the flying shuttle. The hardest part was to create a subtle mechanized device for pulling and twisting the cotton fiber just the right amount to create strong thread. In 1764, James Hargreaves invented such a device, called a spinning jenny— “jenny” or “jen” was short for “engine.” So, think of it as a “spinning engine.” With eight spindles, the spinning machine immediately increased by eightfold the amount a worker could produce. The spinning jenny could fit into a small cottage and be operated by unskilled workers, including children. But some were not pleased with the innovation. Workers skilled at the old spinning wheel, and fearful that the new machine would take their jobs, marched over to Hargreaves’ house and destroyed twenty of the first new machines before they could be used. Worse still for Hargreaves, his patent claim on one of the most famous inventions of the Industrial Revolution was invalidated because he applied for it after he had already sold several machines (Rosen 222-224).

The next big challenge for the industrial tinkerers was to engineer a way that these new machines could be powered by an energy source that was more efficient and powerful than human muscle. In 1769, Richard Arkwright, a barber and wigmaker, figured out how to hook up a new spinning machine to a water wheel. It is possible that John Kay, a clockmaker that Arkwright met in a pub, might have had the original idea, but Arkwright made use of it and called it the water frame. Arkwright’s spinning factory opened in 1771 along the River Derwent. It was an immediate success, spinning strong, high-quality threads cheaply and better than those spun by hand or a spinning jenny. Arkwright’s cotton factory spun 24 hours a day, employing mostly women and children on 12-hour shifts. Each water frame spun 91 spools at a time, more than almost 100 people could spin on an old spinning wheel. Arkwright’s business took off in large part due to the assistance of the British Parliament, which, to protect the new English textile industry, outlawed the importation of superior cotton cloth from India (Ashton, 57-58).

Another inventor, Samuel Crompton, combined the spinning and weaving process into one machine in 1774. Raw cotton could be introduced in one end and produce cloth on the other. Crompton failed to patent his invention, but the enterprising Arkwright immediately incorporated it into his new factories. The invention was called a spinning “mule” because, like a mule, it was the offspring of two different types of parents. With Crompton’s mule, Arkwright now had the most productive textile mills in the world. Arkwright guarded his patents and charged extremely high royalties to use them. As a result, he dominated the early spinning industry and became fabulously wealthy. Ten years after giving up wigmaking and taking a risk to start his own factory, he employed 5,000 workers, including children as young as six (Rosen 228-233).

Arkwright was not a great inventor. He borrowed most of his ideas from others. But he was one of the first and most successful entrepreneurs of the early Industrial Revolution; he understood the potential of these new textile inventions to produce inexpensive and high quality cloth. When others complained in court that he had stolen their ideas, Arkwright responded that “if any man has found a thing, and begun a thing, and does not go forwards. . . another man has a right to take it up and get a patent for it” (233). He, perhaps more than any other single person, created the cotton industry that spurred the Industrial Revolution and created great wealth for himself and for England. From 1800 to 1850, cotton products accounted for the majority of monetary value for British exports (Stearns 29).

In 1785, Edmund Cartwright invented the power loom, another game changer. Although it did not become widely used until after 1800, it was powered by steam and thus replaced the flying shuttle, which could not compete with the new loom’s weaving speed and efficiency. Cartwright explained his inspiration:

As soon as Arkwright’s patent [for spinning] expired, so many mills would be erected and so much cotton spun that hands would never be found to weave it. . . . It struck me that as plain weaving can only be three movements which were to follow each other in succession, there would be little difficulty in producing them and repeating them. Full of these ideas I immediately employed a carpenter and smith to carry them into effect. As soon as the machine was finished, I got a weaver to put in a warp, which was of such materials as sailcloths are usually made of. To my great delight, a piece of cloth, such as it was, was the product.
(Rosen 239)

Cartwright’s invention took many years to refine because it was difficult for the loom to weave quickly and mechanically without the thread slackening or the shuttle moving too slowly or too rapidly. The first power looms were installed in a factory in Manchester, where they suffered a similar fate to the first spinning jennies. Some Manchester craft weavers, worried that they would lose their skilled jobs, threatened the first power loom factory and soon afterwards a fire mysteriously destroyed it (239). But the genie was out of the bottle—no other loom could compete. Like the spinning mule, the power loom and the steam engine that powered it could not fit into a cottage. All these big, heavy machines would need to be brought under one large roof. The cottage industry had died, but factories were just beginning to house industry. And these larger machines and factories led to enormous growth in other industries, especially those of coal and iron.

The Iron Industry

In the centuries before the Industrial Revolution, the quality of iron and the process of refining it had changed little in Great Britain. Iron had been used for agricultural tools, chains, locks, bolts, nails, horse stirrups, scythes, sickles, and anchors. Through a laborious and very time-consuming process, master ironcrafters could even make steel, a form of processed iron, with fewer impurities, reserved for making knives, razors, swords, guns and small working parts for clocks and watches. In the 18th century, ironmongers began to experiment with ways to tease out more impurities from iron. They wanted to make their iron stronger and less expensive, and they also wanted to make the tedious process of iron-making more efficient (Weightman 28-33).

Henry Cort, an ironmaster pursuing a way to refine iron,discovered two methods that changed the industry. He reheated bars of iron, melting them down to apaste, mixed the paste and heated it with coke (a substance burned off from coal), then stirred it so that carbon and many impurities burned off. The purified iron was rolled up into a puddled ball and finally rolled out to squeeze out any dross that remained. Cort called the process “puddling and rolling” and patented it in 1785. This iron-refining process allowed England to stop importing iron from northern Europe and instead to grow the largest iron industry in the world. This cheaper and stronger iron galvanized every major industry—construction, tools, shipbuilding, textile inventions, steam engines and railroads (54-55). Unfortunately, Cort later lost all the wealth he created for himself, including his patents, when it was discovered that he had embezzled money from the British Navy to buy his first iron forgery. (Rosen 56) Nevertheless, iron production in Great Britain skyrocketed.

Amount of Iron Produced in Great Britain

Periods

Metric Tons of Pig Iron

1781-1790

69,000

1825-1829

669,000

1855-1859

3,583,000

1875-1879

6,484,000

1900-1904

8,778,000

(Cipollal Fontana Economic History of Europe)

The Steam Engine

The defining invention of the Industrial Revolution was most definitely the steam engine. The steam engine was the energy behind the most advanced textile inventions, such as the spinning mule and the power loom. It symbolized the transition from human power in homes to machine power in factories. Moreover, the steam engine revolutionized transportation when it was applied to locomotives and ships. So how did this amazing invention come about? And how did it work?

The steam engine was originally invented in England to pull water out of coal mines. For thousands of years, wood from local forests had been the main fuel in England, as well as the main material for shipbuilding and housing construction. By the end of the 17th century, however, few forests remained (Weightman 28-33). So the English sought to find an alternative energy source for heating. They turned to coal, which was in great supply. By the early 1700s, the easy-to-reach open coal pits were gone, and mine shafts as deep as 200 feet were dug to find it (27). In these deep shafts, groundwater would eventually seep in and flood the tunnels. This seepage was dangerous for miners and expensive for mine owners. Miners used pots, hand pumps and, occasionally, windmills to drain the water. Finally, in 1708, Thomas Newcomen invented a simple engine that used steam to pump water out of coalmines. Here’s how his engine worked. Boiled water created steam, which entered a chamber or cylinder, which pushed a piston up. The piston lifted a pump. Watch this animation to see it in action. Newcomen’s steam engine worked—slowly. But it could only create a pumping motion and not a rotating motion that might be used to grind wheat or move machinery. In fact, it was so inefficient in its use of energy that nobody used it for any other purpose for over sixty years (30).

In the 1760s, James Watt (1736-1819), a Scottish instrument maker, teamed up with professors from the University of Glasgow to improve Newcomen’s engine. In the old engine, as you can see from the animation, a piston moved up and down as steam was injected: this steam pushed the piston up the cylinder, then condensed on the down stroke (see animation here). The piston cylinder in Newcomen’s engine had to alternate between hot and cold temperatures, to expand or condense the steam—warm on the upstroke and cold on the downstroke. But this resulted in a waste of energy and a waste of time, as the piston cylinder changed temperature and had to be constantly reheated. The burning question: how could the piston cylinder remain hot and cool at the same time? (35-36)

In 1765, the twenty-nine-year-old Watt, strolling across the town square in Glasgow and reflecting on the inefficiency of Newcomen’s engine, had a flash of insight, an epiphany. “The whole thing was arranged in my mind,” he said. He suddenly understood that a separate cylinder—called a condenser—could be kept permanently cool while being connected to the piston cylinder, which would remain hot (35-36). Watt recalled, “The idea came into my mind, that as steam was an elastic body it would rush into a vacuum, and if a communication were made between the cylinder and an exhausted vessel it would rush into it, and might be there condensed without cooling the cylinder” (Rosen 115).

Putting the insight into practice, Watt added a second cylinder or chamber. The steam would be sucked out of the piston chamber and into the new cylinder, cool off, condense, and thus form a vacuum that used atmospheric pressure to move the piston. Meanwhile, the cylinder with the moving piston remained hot as another injection of steam entered. (104 see photo on page 105) Watt patented the idea of this separate condenser in 1769. Known for this famous flash of insight, Watt was actually a relentless and careful experimenter, a student of the Scientific Revolution. In all his work, he used rigorous and precise scientific methods to test his ideas.

After years of struggling on his own to make the new steam engine work correctly, Watt successfully teamed up with the largest and most famous factory in the world, Soho Manufactory, which made jewelry, silverware, and tools in Birmingham, England. The owner was looking for an energy source that was more powerful than water wheels. At Soho, Watt met and collaborated with the most skilled ironworkers and engineers in the country. With their help, the new engine became four times as productive as Newcomen’s. Watt continued to tinker and improve it so that steam could be injected into both sides of the piston cylinder, creating a double-acting piston. In 1781, Watt pressed on further to adapt the engine from a reciprocal up-and-down motion to a turning or rotary motion. Now, the steam engine could supply consistent and cheap energy for all the latest textile inventions. At the insistence of one of his engineers, Watt patented a steam-powered carriage but didn’t think much would come of it. (Weightman 58-9)

Watt’s rotary steam engine was being perfected just at the same moment that iron-working improved and textile inventions were becoming more powerful, greater in size, sizeable and in need of better, cheaper, and more reliable power sources. The new steam engine could be harnessed to all these new inventions. In 1782, the year after Watt perfected the rotary steam engine, there were only two cotton mill factories in Manchester. Twenty years later there were more than 50. (Ashton 60)

The Factory

The idea for the first textile factory—a word derived from “manufactory,” the place where goods were manufactured—came from a British silk mill worker, John Lombe. He travelled to Northern Italy to steal designs for secret Italian machines that spun and wove the silk (it is worth noting here that the Chinese had been spinning and weaving silk with simple looms for thousands of years before the Italians.) In 1719, Lombe patented the ideas as his own in Great Britain and built a large building next to a river to use a water wheel to power the machines. The mill was five stories high and employed 200 men. Silk was a luxury item that most could not afford, and so few enterpeneurs followed in Lombe’s footsteps. But this silk factory came into mind years later when industrialists were looking for ways to power new textile inventions at one location. As textile inventions grew in size , they could no longer fit in cottages (Rosen 212-217; wikipedia article on factories).

Like Lombe’s old silk factory, the first textile factories were located on rivers so that a water wheel could provide a reliable and consistent rotating power for the new inventions. Arkwright built his first cotton mill just away from a river and dug out a channel or millrace, so that the water wheel benefitted from the current, as well as the gravity of water coming down hill and into a narrow chute (Rosen 230).

But, the invention of Watt’s rotary steam engine changed everything. Textile factories no longer had to be built right next to a river. However large buildings were required for the new large steam engines, spinning mules, and power looms. In 1790, Arkwright used steam power to run his spinning mule factory. Workers, along with their families, congregated at these new factories. Their need for stores, churches and the like resulted in the formation of small communities, which became towns and cities.

Another important result of the factory was specialization of labor. In 1776, Adam Smith, a Scottish economist, wrote the all-time most influential and famous economics book: Wealth of Nations. For Smith, the key to the efficiency, productivity, and quality control of a factory was the division of labor. This was a process by which the key tasks in manufacturing were identified and assigned to individual workers to specialize, perfect and repeat with dispatch. *********Add sentence about effects/relevance of this approach or at least how “revolutionary”/different it was from before or how it fueled growth.

Railroads

The steam engine, it turns out, also sparked innovative methods of transportation. Railways were not new in pre-industrial Britain. There were over 1,000 railways by 1800, most of them connected to an iron pit or a coal mine with a canal or river. But all of these railways were drawn by horses (Weightman 118). In fact, horses were the best form of land transportation in Eurasia since the beginning of time; the only other option was to walk. Steam would change all that.

The first full-scale steam-powered locomotive took its maiden voyage down the main street of Camborne, England on Christmas Eve in 1801. The Cornish “puffer” drove like a car without rails and was the brainchild of Richard Trevithick. After the first run, the inventor parked it in a shed and went to celebrate his success. Unfortunately, he forgot to turn the boiler off and the entire shed and locomotive were destroyed in a fire. But Trevithick got another chance. An ironworks owner built a nine-mile railway to compete with a canal. Horses pulled cars full of iron and coal along the rails. In a competition, Trevithick’s Cornish “puffer” succeeded in hauling ten tons of bar iron and seventy passengers along rails at a speed of five miles per hour. Sadly, Trevithick could never turn the invention into financial success: he died in Peru failing in his attempt to seek his fortune in silver mines (Weightman 48-49, 58-9).

A young self-taught engineer, George Stephenson, picked up where Trevithick left off. Stephenson was raised in coalfields, where his family worked. He took jobs there, first working in the mines with a pick and then working on an old Newcomen steam engine that pumped water out of mine shafts. Stephenson grew up illiterate, like the rest of his family, but, as a teenager, taught himself to read and hired a tutor to teach him basic math. To make extra money, he learned to repair watches. At 22 years old, Stephenson was put in charge of running a Watt steam engine at a spinning factory. Over the following years, he taught himself mechanical engineering by taking apart steam engines and other machines,putting them back together. He took out patents on a steam engine locomotive and iron rails in 1816. He succeeded in improving upon Trevithick’s puffer, but his big break came as the result of the fast-growing cotton industry in Manchester (Rosen 298- 305).

In 1825, Stephenson was commissioned to construct a 30-mile railway line from Liverpool to Manchester. Manchester was the largest industrial town in the world, and merchants needed to transport lots of cotton and finished cloth. Despite its young age, Liverpool, as the port for the Manchester cotton industry, handled one third of the world’s trade (Rosen 298- 305). Stephenson surveyed the route and built the railway. He set the distance between the two tracks at four feet, eight and a half inches, because it happened to be the width of some coal-mining cars—and this would become the worldwide standard railroad gauge.

In 1829, the railway owners sponsored a contest to find out who could make the fastest and most reliable locomotive to run on the newly built Manchester-to-Liverpool railway. Most contestants entered steam-powered vehicles, but one underdog participant actually used a horse trotting on a treadmill attached to a car. A man named George and his son, Robert, called their locomotive theRocket. They defeated five competitors and reached average speeds of at least 29 miles per hour. On the day the Manchester-to-Liverpool railroad was opened to the public, a member of Parliament and a supporter of the railway was accidently killed by the Rocket. In a failed attempt to save the gentleman’s life, Stephenson opened up the throttle to top speed and made a heroic dash to a hospital in the next town—and he averaged 35 mph for 15 miles. The competition garnered much attention in England and Europe; Stephenson and other top competitors took offers for their new locomotives from as far away as Russia. In 1831, just two years after the race, the Liverpool-to-Manchester railway carried 450,000 passengers, 43,000 tons of cotton, and 11,000 tons of coal. By 1835, the railway carried 120,000 tons of coal (Weightman 132-134; Rosen 301 to 310)

This silent movie used a replica of Stephenson's Rocket. It gives you a sense of the size and speed of the famous train.

Stephenson’s success was a culmination of over a century of industrial innovation. The Rocket had incorporated the steam engines of Newcomen and Watt, Cort’s iron-refining innovations, and Trevithick’s original locomotive. But, it also would not have occurred were it not for the rising cotton industry that created the need for the railroad in the industrial town of Manchester. And, of course, the new railroads used coal as the main fuel source. The ultimate triumph of the Industrial Revolution, railroads moved people, raw materials, and finished goods rapidly around England. This interaction brought people to the new industrial cities; gradually increased trade within England, Europe, and the world; and helped turn England into the wealthiest nation on earth.

Growth of British Railroads in Miles of Track

Year

Miles of Track

1829

51

1839

970

1849

6,031

1859

10,002

(history home web site)

Capitalism: The Free Market

In the previous economic system during the Middle Ages, peasants typically worked the land and in exchange they would perform services or labor for a noble lord. In many parts of Europe, peasants were tied to the land as serfs. As we saw in our earlier discussion of pre-industrial society, the introduction of financial innovations such as stock markets, joint stock companies, and national banks were all instruments for a new free-market economic system that had been evolving over centuries. The feudal system gradually eroded , and during the Industrial Revolution, the free market took its place.

The innovations during the Industrial Revolution accelerated the rise of an economic system called thefree market, also known as capitalism (some people use the French phrase “laissez faire,” meaning “let them act”) All these terms imply pretty much the same thing: in a pure free market, buyers and sellers (private business owners) satisfy their own interests by voluntarily agreeing to exchange money for a product, without the interference of the government. So, for example, when Apple Computer, a private company, sells an iPad to a customer, that’s the free market at work. Apple makes a product it thinks consumers want, and the buyer chooses to use his or her money to buy the iPad. Business owners compete in a free market to make the best product or service at a price that will attract the most buyers. The successful businesses grow larger and employ more workers, thereby growing the economy. Unsuccessful businesses go out of business. The government does not intervene. Proponents of the free market believe that this system encourages innovation, high quality goods, and increases the wealth of countries.

The government does as little as possible in a free market economic system. In its purest form, governments should protect private property, improve infrastructure such as roads, and maintain a stable rule of law for trade. That’s about it. According to pure capitalism, healthcare, education, retirement benefits and other social services should be provided by private businesses rather than the government.

You should recognize this system because it is mostly the type of economy we have today in the United States, though the role of the government in the free market remains a consistent subject of national political debate. It’s also important to keep in mind that capitalism is an economic system, but it’s also supported by a cultural belief system. The United States, like England, generally believes in hard work, individual rights, respect for time, self-discipline, and an entrepreneurial spirit of innovation and risk-taking (Grasby 68).

This now widely embraced idea of a free market system came to fruition during the Industrial Revolution. We have read about how private individuals took risks to create technologically innovative products—such as the flying shuttle or the power loom—and then tried to sell them or use them to make a profit. This spirit of invention was not new, but during the Industrial Revolution it was relentless and occurred on a scale that was unprecedented. When the Industrial Revolution was in its infancy, in 1776, Adam Smith, a Scottish economist, wrote the most influential and famous economics book ever, entitled An Inquiry into the Nature and Causes of the Wealth of Nations. He argued that when individuals pursue their self-interest in a free market, they benefit society as a whole because the competition keeps prices low while encouraging quality and innovation.

Free market capitalism also has it critics. Later in this chapter, we will learn about the most famous critic, Karl Marx, and his idea of Socialism, an economic system that prizes the public good and equality over individualism and competition.